MITSUBISHI POLYESTER FILM, INC. аnd SKC, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Terphane, Inc. and Terphane, Ltda., Defendant-Intervenors.
Court No. 13-00062
United States Court of International Trade.
June 8, 2017
Slip Op. 17-70
1359
Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant. With her on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, Jane C. Dempsey, Trial Attorney, and Mykhaylo Gryzlov, Senior Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, Washington, DC.
J. Michael Taylor and Stephen A. Jones, King & Spalding, LLP, of Washington, DC, argued for Defendant-Intervenors. With them on the brief was Shannon M. Doyle.
OPINION AND ORDER
Gary S. Katzmann, Judge
Polyethylene terephthalate (PET) is all around us. PET is a polymer with a great number of uses—for instance, PET film could be found in tamper-evident food packaging such as potato chip bags and safety seals, in frozen and refrigerated food packaging, in laminated materials such as traffic signs, in printable products used in graphical media, in the scratch-resistant coverings of smartphones, and in protective coverings that shield sensitive equipment from UV radiation, to name but a few applications. In this case the court considers whether a particular set of PET products manufactured abroad by Terphane, Ltda. and imported by Terphane Inc. (collectively Terphane), falls within the scope of a duly issued antidumping duty order on imports of certain PET products. The basic question is whether the Department of Commerce‘s (Commerce) determination that Terphane‘s products were not within the scope of the antidumping duty order was supported by substantial evidence and in accordance with law. The court concludes that Commerce reasonably determined that the language of the order was ambiguous with respect to whether it includes films like Terphane‘s. The court also concludes that Commerce‘s analysis in determining that Terphane‘s films are not dispositively in scope is deficient and unsupported by substantial evidence. Accordingly, the case is remanded for further proceedings.
Generally speaking, PET film production begins with the polymerization process, in which the combination of certain chemicals and additives, heated in multiple rounds and then cooled, forms PET pellets or chips. The next phase is extrusion.
This matter comes before the court on the Motion of Plaintiffs Mitsubishi Polyester Film, Inc. and SKC, Inc. (collectively Mitsubishi) for Judgment on the Agency Record, pursuant to USCIT Rule 56.2, with regard to the determination by Commerce issued in the Antidumping Duty Order on PET Film, Sheet, and Strip from Brazil: Final Scope Ruling, Terphane, Inc. and Terphane Ltda. (Jan. 7, 2013), PD 35 (Terphane Scope Ruling or Scope Ruling).12 Mitsubishi argues that a number of legal and factual determinations in the Scope Ruling, in which Commerce found that certain of Terphane‘s PET film products are outside of the scope of the underlying antidumping duty order, are contrary to law and, alternately, unsupported by substantial evidence on the record pursuant to Section 516A(b)(1)(B)(i) of the
BACKGROUND
I. Legal Framework
Under the antidumping statute, Commerce imposes duties on imported merchandise that is being, or is likely to be, sold in the United States at less than fair value, i.e. dumped, and harms domestic industry.
If Commerce determines that a petition meets these requirements, it initiates an investigation.
When a question arises as to whether a particular product is included in an antidumping duty order, an interested party may apply for a scope ruling from Commerce.
The plain language of the antidumping duty order is paramount in determining whether particular products are included within its scope. Fedmet Res. Corp. v. United States, 755 F.3d 912, 918 (Fed. Cir. 2014) (citing King Supply Co. LLC v. United States, 674 F.3d 1343, 1345 (Fed. Cir. 2012)). Thus Commerce‘s inquiry must begin with the order‘s scope to determine whether it contains an ambiguity and, thus, is susceptible to interpretation. Meridian Prod., 851 F.3d at 1381; see Fedmet, 755 F.3d at 923-24 ([T]he first step of a scope ruling proceeding is to determine whether the governing language is in fact ambiguous. (citing ArcelorMittal Stainless Belg. N.V. v. United States, 694 F.3d 82, 87 (Fed. Cir. 2012))). [B]ecause the meaning and scope of ... orders are issues particulаrly within [Commerce‘s] expertise and special competence, Commerce is entitled to substantial deference with regard to interpretation of its own antidumping duty orders. Meridian Prod., 851 F.3d at 1381-82 (citing King Supply, 674 F.3d at 1348). If the language of the order is unambiguous, its plain meaning governs, and the analysis ends. ArcelorMittal, 694 F.3d at 87.
If the language is ambiguous, Commerce must review it in light of [t]he descriptions of the merchandise contained in the petition, the initial investigation, and the determinations of [Commerce] (including prior scope determinations) and the [ITC].
Only if Commerce‘s analysis under the (k)(1) factors is not dispositive may the agency consider those factors set forth in
II. The Antidumping Duty Order and Terphane‘s Scope Ruling Request
On September 28, 2007, Mitsubishi, along with Dupont Teijin Films and Toray Plastics (America), Inc., filed an antidumping dumping duty petition covering all PET film imported into the United States from Brazil, China, Thailand and the UAE.4 Polyethylene Terephthalate Film, Sheet, and Strip From Brazil, People‘s Republic of China, Thailand and the United Arab Emirates, Antidumping Duty Petition at 9 (Sept. 28, 2007) (Petition), in Terphane‘s Scope Ruling Request Letter at Ex. 23, PD 1-3, CD 1-4 (Scope Ruling Request); Polyethylene Terephthalate Film, Sheet, and Strip (PET Film) from Brazil, the People‘s Republic of China, Thailand, and the United Arab Emirates: Initiation of Antidumping Duty Investigations, 72 Fed. Reg. 60,801 (Dep‘t Commerce Oct. 26, 2007) (initiation of investigation). In proposing the domestic like product to be investigated, petitioners suggested the definition used by the ITC in its investigations into PET products from India and Taiwan:
[A]ll gauges of raw, pretreated, or primed PET film, whether extruded or coextruded. Excluded are metallized films and other finished films that have had at least one of their surfaces modified by the application of a performance-enhancing resinous or inorganic layer more than 0.00001 inches thick.
Petition at 9; Polyethylene Terephthalate Film, Sheet and Strip From India and Taiwan, USITC Publication No. 3518, Inv. Nos. 701-TA-415 and 731-TA-933-934 (June 2002) (Final), at 4 in Scope Ruling Request at Ex. 27.
The Period of Investigation was July 1, 2006 through June 30, 2007. 72 Fed. Reg. at 60,803. Petitioners identified one respondent, Terрhane Ltda.,5 a Brazilian producer of PET film. Id. Commerce issued its preliminary determination of sales at less than fair value on May 5, 2008, and its final determination on September 24, 2008, in each making an affirmative determination of dumping of PET film from Brazil. Notice of Preliminary Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet,
The products covered by each of these orders are all gauges of raw, pre-treated, or primed PET film, whether extruded or co-extruded. Excluded are metallized films and other finished films that have had at least one of their surfaces modified by the application of a perform-
ance-enhancing resinous or inorganic layer more than 0.00001 inches thick. Also excluded is roller transport cleaning film which has at least one of its surfaces modified by application of 0.5 micrometers of SBR latex. Tracing and drafting film is also excluded. PET film is classifiable under subheading 3920.62.00.90 of the Harmonized Tariff Schedule of the United States (HTSUS). While HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of these orders is dispositive.
Order at 66,595-96.
In February 2012, Terphane requested a scope ruling to determine whether four of the PET film products it produces in and imports from Brazil, and sells in the United States (collectively Copolymer Surface Films), are subject to the Order.7 Scope Ruling Request at 1-2. Terphane asserted that its Copolymer Surface films are not covered by the scope of the Order because they all have a performance-enhancing resinous layer that exceeds the thickness requirement listed in the scope exclusion. Id. at 3. This layer is a copolymer resin which Terphane refers to publicly as COEX. Id. at 5. COEX possesses chemical properties different from the core PET layer or layers to which it is conjoined through co-extrusion. Id. at 9-14. Terphane submitted evidence supporting its assertion that the COEX layer‘s physical-chemical makeup provides it with perform-
Petitioners commented on Terphane‘s request on March 23, 2012. Petitioner‘s9 Comments on Terphane‘s Scope Ruling Request, PD 9, CD 5 (Pets’ Mar. 23 Comments). Terphane replied on May 7. Terphane‘s Reply to Petitioners’ Comments on Terphane‘s Scope Ruling Request, PD 17, CD 9 (Terphane‘s May 7 Comments). In April, Commerce issued questionnaires to Terphane and petitioners, the responses to which came in May. Terphane‘s Questionnaire Response, PD 18, CD 10 (May 7, 2012) (Terphane‘s QR); Petitioners’ Questionnaire Response, PD 21-22, CD 12-14 (May 7, 2012) (Pets’ QR). Terphane and petitioners commented on each other‘s questionnaire responses the same month. Terphane‘s Comments on Petitioners’ Questionnaire Responses, PD 23, CD 15 (May 17, 2012); Petitioners’ Response to Terphane‘s Questionnaire Response, PD 24, CD 16 (May 17, 2012). On June 7, Terphane responded to petitioners’ May 17 comments, and on June 18, petitioners submitted rebuttal comments to Terphane‘s June 7 comments. Terphane‘s June 7 Response to Petitioners’ May 17 Comments, PD 29, CD 17 (Terphane‘s June 7 Response); Petitioners’ June 18 Rebuttal to Terphane‘s June 7 Response, PD 30, CD 18.
Commerce issued the Terphane Scope Ruling on January 7, 2013. Scope Ruling at 1. The agency did not issue its ruling within forty-five days of Terphane‘s request in accordance with
Commerce also determined that [t]he exclusion described in sentence two of the scope ... refers to a specific category of products which the ITC identified as ‘equivalent PET film.’ Scope Ruling at 4. Commerce focused on the ITC‘s 1991 definition, as part of the antidumping duty investigations of PET film from Japan and Korea, of DuPont Cronar and Kodak Estar films, along with those products equivalent to Cronar and Estar, as equivalent PET film. Scope Ruling at 4; ITC Japan and Korea PET Investigation at 15. Commerce reasoned that the scope language should not be interpreted as to render as subject films identical to DuPont‘s Cronar and Estar, which ... are the paradigmatic examples of films covered by the so-called ‘0.00001-inch exclusion.’11 Scope Ruling at 12. Commerce further reasoned, be-
Commerce determined that the phrase extruded or co-extruded encompasses PET products regardless of which extrusion method is used, and does not indicate that all extruded and/or co-extruded films are covered, regardless of the subsequent exclusions. Scope Ruling at 12.
Commerce determined Terphane‘s films to be finished films, reasoning that the phrase other finished films must include some films that are also raw, pre-treated, or primed PET films, as reading it otherwise would obviate the word finished. Id. Thus, the term ‘finished films’ should not be interpreted so narrowly as to exclude all films covered by the first sentence of the scope or so broadly that it includes all such films. Id.
Commerce considered two of its own prior scope rulings: Garware and Avery Dennison.12 Id. In Garware, Commerce
Commerce concluded that
Terphane‘s copolymer surface film products, as described by Terphane, are finished films which have a performance-enhancing resinous layer, and are therefore outside of the antidumping duty order on PET film, sheet, and strip from Brazil, provided Terphane can establish, to the satisfaction of CBP, that the performance-enhancing layer is greater than 0.00001 inches thick.
Id. at 14. Commerce found its consideration of the
III. The Instant Litigation
Mitsubishi timely filed suit in this court on February 6, 2013. ECF No. 1.
Mitsubishi filed its Rule 56.2 motion for judgment on the agency record and accompanying memorandum in support on August 2, 2013. Pl.‘s Br. The United States and Terphane filed their responses on December 4, 2013. Def.‘s Opp‘n; Def.-Inter.‘s Opp‘n. Mitsubishi filed its reply on February 3, 2014. Pl.‘s Reply.
Oral argument was held before the court on June 26, 2014. ECF Nо. 56. The court issued a letter requesting supplemental briefing on a discrete issue highlighted by Mitsubishi toward the end of argument, specifically, how to correctly read from the scope language the phrase have had in conjunction with the word modified. Letter to Parties, Aug. 25, 2014, ECF No. 60. All parties filed their supplemental briefs on November 5, 2014. Def.‘s Suppl. Br., ECF No. 66; Def.-Inter.‘s Suppl. Br., ECF No. 68; Pl.‘s Suppl. Br., ECF No. 69. The United States filed its response to Mitsubishi‘s supplemental brief on December 11, 2014. Def.‘s Suppl. Opp‘n, ECF No. 77. Terphane filed its response to the same on December 12, 2014. Def.-Inter.‘s Suppl. Opp‘n, ECF No. 78. Mitsubishi also filed its response to The United States’ and Terphane‘s Supplemental Briefs on December 12, 2014. Pl.‘s Suppl. Reply, ECF No. 79.
On March 20, 2017, the case was reassigned. Order of Reassignment, ECF No. 89. Oral argument was held before the new judge on May 9, 2017. ECF No. 99.
DISCUSSION
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this action pursuant to
The Court will uphold Commerce‘s determination unless the Terphane Scope Ruling is unsupported by substantial evidence on the record, or otherwise not in accordance with law.
On legal issues, the Court affords significant deference to Commerce‘s interpretation of its own orders, mindful that scope determinations are highly fact-intensive and case-specific. Fedmet, 755 F.3d at 918 (quoting King Supply, 674 F.3d at 1345). Indeed, Commerce enjoys substantial freedom to interpret and clarify its antidumping duty orders. But while it may interpret those orders, it may not change them. Mid Continent Nail Corp. v. United States, 725 F.3d 1295, 1300 (Fed. Cir. 2013) (quoting Ericsson GE Mobile Commc‘ns, Inc. v. United States, 60 F.3d 778, 782 (Fed. Cir. 1995), as corrected on reh‘g (Sept. 1, 1995)). Put another way, orders may be interpreted as including subject merchandise only if they contain language that specifically includes the subject merchandise or may be reasonably interpreted to include it. Id. (quoting Duferco Steel, 296 F.3d at 1089). Thus, despite this Court‘s deference to Commerce‘s interpretation of its orders, the question of
On factual issues, [s]ubstantial evidence is such relevant evidence as a reasonable mind would accept as adequate to support the conclusion reached. Sango, 484 F.3d at 1378 (citing Consol. Edison v. Nat‘l Labor Relations Bd., 305 U.S. 197, 229 (1938)). The specific factual findings on which [Commerce] relies in applying its interpretation are conclusive unless unsupported by substantial evidence. United States v. Eurodif S.A., 555 U.S. 305, 316 n.6 (2009) (citing
I. The Scope of the Order is Ambiguous
In interpreting the scope of an order, the language therein is paramount. Fedmet, 755 F.3d at 918. The court concludes that the Order‘s scope language does not on its face demand an unambiguous reading vis-à-vis the instant matter, but rather is subject to multiple reasonable interpretations. The court thus holds that Commerce has met the requisite low threshold to warrant finding ambiguity and proceeding to an analysis under the
A. Parties’ Arguments
Mitsubishi argues that the Order‘s scope language unambiguously encompasses Terphane‘s Copolymer Surface Films, and thus Commerce‘s subsequent analysis under
The Government counters that the first sentence defines the universe of products that are subject to the scope, while the
In reply, Mitsubishi contends that the second sentence does in fact specify a production process: the exclusion covers only metallized films and other finished films, which necessarily excludes co-extruded PET film lacking additional processing, because ‘finished’ indicates that films covered by the second sentence have undergone some manufacturing process other than the first stage—i.e. extrusion/co-extrusion. Pl.‘s Reply at 7. Mitsubishi argues that the phrasing must mean finished refers to processes, like metallization, that occur post-extrusion. Id. Mitsubishi also raises for the first time in its reply the argument that the language finished and modified in the scope‘s second sentence introduce a temporal qualification to the exclusion, to wit, that to come under the exception a PET film must be extruded before the protective-layer of sufficient thickness is applied, rendering the scope unambiguous.15 Id. at 5-13.
The scope language in the Order is ambiguous such that Commerce’ decision to perform an analysis under
Mitsubishi also cannot identify language that would command an unambiguous reading of the scope with the temporal restraints they identify, such that the second sentence exclusion covers only films with post-extrusion coatings. Pl.‘s Suppl. Br. at 7. In regard to Mitsubishi‘s argument that Commerce‘s reading of the second sentence creates surplusage, the court is satisfied that Commerce and the defendant articulate plausible readings of the allegedly superfluous language such that they are useful descriptors. See Scope Ruling at 12; Def.‘s Suppl. Opp‘n at 5-8. To read the second sentence as Mitsubishi would like the court to would instill overly narrow meaning to otherwise broad language. See
19 C.F.R. § 351.225(k)(1) was Unsupported by Substantial Evidence
Having affirmed Commerce‘s determination regarding ambiguity, the court must now consider Commerce‘s finding that the factors in
A. Parties’ Arguments
Mitsubishi asserts that (k)(1) evidence could reasonably indicate only that Terphane‘s films are dispositively in-scope, and thus the agency‘s determination that the (k)(1) criteria do not indicate dispositively that Terphane‘s films are in-scope is unsupported by substantial evidence.19 Pl.‘s Br. at 24-30. Mitsubishi argues Commerce ignored that throughout the history of the Order and previous antidumping duty orders on PET film, petitiоners, Commerce, the ITC, and respondents have always regarded coextruded films ... as being in-scope, while [n]o interested party or government agency has indicated that they might be out-of-scope depending on the thickness of the coextruded layer. Id. at 26. Further, Mitsubishi argues that analyses within elements of (k)(1) evidence demonstrate a pattern of association between equivalent PET films and their possible exclusion under the second sentence, but nowhere display the same in regards to co-extruded films, or suggest that co-extruded films might qualify as equivalent PET films depending on the thickness of a co-extruded layer. Id. at 27. Mitsubishi also takes issue with Commerce‘s failure to mention, address, or engage with Terphane‘s questionnaire responses from the original investigation, in which Terphane stated its belief that its co-extruded products were in-scope, and the original Petition, in which plaintiffs (as petitioners) complained about lost sales due to a Terphane film that was functionally similar to the films at issue in this case. Id. at 26-28. Altogether, these analytical choices strike Mitsubishi as a failure to explain how (k)(1) evidence does not show dispositively that Terphane‘s films are in-scope.
Mitsubishi also characterizes Commerce‘s determination as relying on the mistaken determination that Cronar and Estar, which are equivalent PET films, are in fact co-extruded. Pl.‘s Br. at 28-29. Mit-
The Government and Terphane respond first that Mitsubishi—by identifying pieces of the record where equivalent PET is spoken of as excluded from the scope while co-extrusion is not—misunderstands the regulatory requirement, which is that Commerce under
Mitsubishi replies that Avery Dennison and Garware are merely consistent, rather than controlling or dispositive, and asserts that [m]uch of Defendant and Defendant-Intervenor‘s arguments are post-hoc rationalizations. Pl.‘s Reply at 14-15; see Burlington Truck Lines, 371 U.S. at 168-69; see also Nan Ya Plastics Corp., Ltd. v. United States, 37 CIT —, —, 906 F.Supp.2d 1348, 1354 (2013). Mitsubishi adds that the Government fails to identify any relevant discussion of descriptions of the merchandise in the Analysis section of Commerce‘s
As to Terphane‘s points, Mitsubishi responds that it failed to identify how exactly the performance-enhancing characteristics of Cronar and Estar are sufficiently similar to Terphane‘s Copolymer Surface Films such that the latter should be excluded for the same reasons as the former.22 Pl.‘s Reply at 18.
B. Analysis
The court concludes that Commerce did not analyze the descriptions of the merchandise contained in the petition, [and] the original investigation on the record, including those that fairly detract from its determination, see Universal Camera, 340 U.S. at 488, such that its entire analysis dispositively answers the scope question in accordance with the substantial evidence standard.
In making a scope determination, Commerce must ‘utilize[] and abide[] by the statutory and regulatory provisions that authorize [it] to investigate [scope issues].’ Shenyang Yuanda Aluminum Indus. Eng‘g Co. v. United States, 40 CIT —, —, 181 F.Supp.3d 1348, 1356 n.15 (2016) (quoting AMS Associates, Inc. v. United States, 737 F.3d 1338, 1344 (Fed. Cir. 2013)). Individual pieces of (k)(1) evidence together depict the regulatory history of a type of merchandise such that Commerce may informedly determine whether the scope covers the products under review. Mid Continent Nail, 725 F.3d at 1302 (If the [scope] language is ambiguous, Commerce must next consider the regulatory history, as contained in the [] ‘(k)(1) materials.‘) (citations omitted). This Court has held that [t]his includes an informed and meaningful assessment of the Petition. Shenyang, 181 F.Supp.3d at 1356. Failure to meaningfully consider the (k)(1) factors makes remand appropriate. Id.; see Mid Continent Nail Corp. v. United States, 35 CIT —, 770 F.Supp.2d 1372, 1379 (2011) (citing Allegheny Ludlum Corp. v. United States, 24 CIT 452, 479, 112 F.Supp.2d 1141, 1165 (2000) ([I]t is well-established that Commerce‘s total failure to consider or discuss record evidence which, on its face, provides significant support for an alternative conclusion renders the Department‘s determination unsupported by substantial evidence.)).
Regardless, Commerce nowhere justified its avoidance of the Petition and original investigation under its (k)(1) analysis, despite that they contain descriptions of the merchandise that Commerce is obligated to analyze thereunder.24 Scope Ruling;
Because the original determination will be a focus of the remand proceeding, with respect to that original determination, the court also notes that it disagrees with Mitsubishi‘s contention that Commerce‘s misclassification of Cronar and Estar as co-extruded products was central to the Terphane Scope Ruling. See e.g. Pl.‘s Br. at 28-29. Instead, the court agrees with the Government that the descriptions of the merchandise in those ITC determinations, which share language with the Order‘s scope, should be relevant to the analysis of products in the instant case. Def.‘s Opp‘n at 15-18.26 Bedeviling Commerce, however, is its explanation that the second sentence exclusion refers to a specific category of products which the ITC identified as ‘equivalent PET film,’ defined by the ITC as including DuPont‘s Cronar and Estar products, and those products equivalent to Cronar and Estar,27 in conjunction with its later statement that Cronar and Estar are the paradigmatic examples of films covered by the exclusion. Scope Ruling at 4, 12. A reasonable mind would understand these categorical statements to mean that, in order to qualify for the exclusion, Terphane‘s Copolymer Surface Films must also be equivalent PET films, or equivalent to Cronar and Estar.28 Read together with Commerce‘s mistaken belief that Terphane had provided evidence that indicates that Cronar and Estar are co-extruded, see Def.‘s Opp‘n at 17, they necessitate a finding that at least some co-extruded films, namely Cronar, Estar, and Terphane‘s Copolymer Products, are also equivalent PET films, and vice versa. However, in light of Commerce‘s mistake, it is unclear the extent to which Commerce‘s identification of the second sentence exclusion specifically with equivalent PET film influences the overall determination that Terphane‘s Copolymer Surface Films are dispositively out of scope. The Government points to the physical similarities between Terphane‘s Copolymer Products, Cronar, and Estar, and reiterates that the specific process used to apply the performance-enhancing layer has no bearing upon whether the exclusion at issue applies. Def.‘s Opp‘n at 18. But if the second sentence exclusion applies only to equivalent PET films, then Commerce would also need to determine that Terphane‘s Copolymer Products are equivalent PET films in order to exclude them under the second sentence; or, if Commerce does not make that determination, then to reach the same conclusion, it would need to explain how the second sentence exclusion can apply to PET films that are not equivalent. Perhaps this is what Commerce means when it refers to those films identical to or equivalent to Cronar and Estar. Scope Ruling at 4, 12. However, it is unclear tо the court what films would be identical to Cronar and Estar without themselves being equivalent PET, and whether there is a meaningful difference between those categories. Commerce should also clarify whether equivalent PET refers solely to those films excluded under the second sentence exclusion, or one that is a term of art in the industry.29 See ArcelorMittal, 694 F.3d at 88 ([A]ntidumping orders should not be interpreted in a vacuum devoid of any consideration of the way the language of the order is used in the relevant industry.). Commerce must reconcile these inconsistencies on remand and more clearly explain its reasoning without the assistance of post-hoc explanations from counsel. See Changzhou Wujin Fine Chem. Factory Co. v. United States, 701 F.3d 1367, 1377 (Fed. Cir. 2012) (The grounds upon which an administrative order must be judged are those upon which the record discloses that its action was based. (quoting Chenery, 318 U.S. at 87)).
III. The Terphane Scope Ruling was not Invalidated by Delay
Mitsubishi argues that the Terphane Scope Ruling is invalidated by delay. Pl.‘s Br. at 30. Mitsubishi points out that Commerce‘s regulations require it to issue a scope determination within 45 days of the date of receipt of an application for a scope ruling, unless it initiates a scope inquiry under the Diversified Products criteria. Id. at 30;
Mitsubishi‘s arguments miss the mark. Courts are most reluctant to conclude that every failure of an agency to observe a procedural requirement voids subsequent agency action, especially when important public rights are at stake. Brock v. Pierce County, 476 U.S. 253, 260 (1986); see also United States v. Great Am. Ins. Co. of NY, 738 F.3d 1320, 1329 (Fed. Cir. 2013). Commerce may, for good cause, extend any time limit within Part 351 of Title 19, unless expressly precluded by statute.
CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that Mitsubishi‘s motion for judgment on the agency record is granted in part and denied in part; and it is further
ORDERED that Commerce‘s determination under
ORDERED that Commerce shall file its remand determination with the court within 60 days of this date; and it is further
ORDERED that the parties shall have 30 days thereafter to file comments; and it is further
ORDERED that the parties shall have 15 days thereafter to file replies to comments on the remand determination.
Gary S. Katzmann
Judge
Notes
For purposes of this order, the products covered are all gauges of raw, pretreated, or primed PET film, whether extruded or coextruded. Excluded are metallized films and other finished films that have had at least one of their surfaces modified by the application of a performance-enhancing resinous or inorganic layer of more than 0.00001 inches thick. Imports of PET film are classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) under item number 3920.62.00. HTSUS subheadings are provided for convenience and Customs purposes. The written description of the scope of this order is dispositive. 67 Fed. Reg. at 44,176, 44,179.
The Government argues that this scope language describe[s] products at the time of import, rather than identifies a narrower chronological production requirement. Def.‘s Suppl. Br. at 8-9; Def.‘s Suppl. Opp‘n at 3-6. The Government supports its reading with a grammatical analysis that, in summary, depicts have had and modified as implicating only the past tense. Def.‘s Suppl. Br. at 9-10; Def.‘s Suppl. Opp‘n at 4-6. Terphane expands this argument, inviting the court to engage in a lengthy and fairly technical exploration of the present perfect tense. Def.-Inter.‘s Suppl. Br. at 5-14; Def-Inter.‘s Suppl. Opp‘n at 2-4.
In addition to its interpretation of the second sentence of the scope as imposing a temрoral requirement, Mitsubishi argues that the Government‘s and Terphane‘s proposed interpretation renders much of the phraseology in the second sentence surplusage: that have had at least one of their surfaces modified by the application of; finished; and had. Pl. Suppl. Br. at 8; see Polites v. United States, 35 CIT —, —, 755 F.Supp.2d 1352, 1357 (2011) ([Commerce] may not render parts of the Order ‘mere surplusage.’ (citing Eckstrom Indus., Inc. v. United States, 254 F.3d 1068, 1073 (Fed. Cir. 2001))). The Government reiterates that the scope language is at most ambiguous, satisfying the threshold requirement for a deeper inquiry under
(a) ... plaintiff shall raise a new argument; (b) this argument shall be of purely legal nature; (c) the inquiry shall require neither further agency involvement nor additional fact finding or opening up the record; and (d) the inquiry shall neither create undue delay nor cause expenditure of scarce party time and resources.
Consolidated Bearings Co. v. United States, 25 CIT 546, 553-54, 166 F.Supp.2d 580, 587 (2001), rev‘d on other grounds, 348 F.3d 997 (Fed. Cir. 2003). Here, Mitsubishi‘s argument regarding the have had language fits into its prior arguments regarding processes and how the scope language should be read. See supra Section I. However, even assuming arguendo that Mitsubishi‘s argument did not fit within its prior arguments and that Mitsubishi had failed to exhaust its administrative remedies, the pure question of law exception applies. See Consolidated Bearings Co., 25 CIT at 553-54, 166 F.Supp.2d 580. In the instant case, Mitsubishi raises a new argument of purely legal nature (the proper reading and interpretation of scope language); no further agency involvement, additional fact finding, оr opening up the record are necessary; and the inquiry will not create undue delay nor cause expenditure of scarce party time and resources. See id.; see also Meridian Prod., 77 F.Supp.3d at 1313 (finding that the language of the scope itself can present a pure question of law). Thus, the pure question of law exception to exhaustion is applicable.